It is the last full financial year for which Martin Brudermüller is responsible as CEO of BASF. He will be leaving at the general meeting in April. The strike turns out badly. The group missed its forecasts in the 2023 financial year. And now the sale of significant parts of Wintershall Dea to the British company Harbor Energy is in danger of failing. Like that Handelsblatt reported that the federal government is critical of the business; The Federal Ministry of Economics will examine the planned deal in detail. The company said the review of the transaction corresponds to the usual procedure expected by BASF.
It’s not just BASF that is under pressure. On Wednesday evening, Bayer announced a “significant workforce reduction” in Germany by the end of 2025 at the latest. There is no quick improvement in sight. As the Ifo Institute announced on Friday, the mood in the German chemical industry worsened in December. Although the bottom appears to have been reached, “an imminent upward trend is not yet in sight,” says Ifo expert Anna Wolf. The chemical industry assessed its order backlog as “very low.” The companies’ pessimism is also reflected in their personnel planning. Expectations here are at their lowest level since the financial crisis of 2008/2009. “The chemical industry is threatened with even greater job losses,” expects Wolf.
According to preliminary figures, BASF will have sales of 68.9 billion euros in the 2023 financial year, well below the forecast of 73 to 76 billion euros. This is from mid-July 2023 and at that time BASF had already significantly revised down its original forecast of 84 to 87 billion euros for the year as a whole. When the figures for the first three quarters were presented at the end of October, the group stuck to the July forecast, but only in terms of the range. Even back then, Brudermüller said that sales and earnings before interest, taxes (EBIT) and special items would probably be at the lower end.
CEO Martin Brudermüller at the general meeting in 2023, his penultimate. He will be leaving at the end of the shareholders’ meeting this year.
(Photo: Uwe Anspach/dpa)
The result from operating activities before special items in 2023 was expected to be 3.8 billion euros, below the July forecast of four to 4.4 billion euros. The decline resulted from lower margins, which could not have been compensated for by the reduction in fixed costs achieved. BASF expects earnings after taxes to be 225 million euros for 2023.
A comparison with the previous year’s figures shows the full extent of the slump. In 2022, BASF generated an operating result before special items of 6.9 billion euros on sales of 87.3 billion euros. After taxes, BASF made a loss of 627 million euros due to billions in value adjustments on its stake in Wintershall Dea.
Arne Rautenberg, fund manager at Union Investment, is not particularly surprised by the announcement. “The numbers are weak and we expected weak numbers,” he tells the SZ. The last quarter is often weak in the chemical industry because of the holidays and because customers are clearing their warehouses and ordering fewer goods. Rautenberg has not yet seen any major improvements at BASF. Brudermüller’s successor, Markus Kamieth, will have to deliver this.
At least the liquid assets give hope that Brudermüller can keep its dividend promise. Free cash flow is expected to be 2.7 billion euros in 2023, it is said. Brudermüller never tires of emphasizing how important an attractive dividend for shareholders is to the board. This also applies in challenging times, he said in an analyst conference for the third quarter. And BASF wanted to stick to the practice of keeping the dividend at least at the previous year’s level. For the 2022 financial year it was 3.40 euros per share.
Shareholders are not happy about the price. On Friday afternoon the paper cost 43.70 euros, slightly more than at the close of trading on Thursday. Like the shares of other energy-intensive companies, it has suffered heavily from the Russian war of aggression in Ukraine, which revealed how dependent they are on oil and natural gas from Russia as an energy source and raw material for cheap fossil fuels. Since February 23, one day before the start of the war, BASF shares have lost almost a third of their value.